Startups: Silicon Valley vs. The Emerging World

techcrunch.com

37 points·llambda··6 comments

Picture a bootstrapped company that earns 2000 USD each month when it starts and doubles revenues annually. While this is a successful startup by almost any definition, note that it takes over 5 years for this business to cross the half-million mark in sales.

So why don't the founders take money and use it to accelerate growth? Realistically, in most places that aren't Silicon Valley, this sort of business will have trouble raising any meaningful amount on halfway decent terms until years 3-4, at which point any sane founder will be loath to give up equity in exchange for cash.

Your example company would eventually be awesome to own. It's annual revenue after y years would be r(y) = 12 * 2000 * 2^y. After 10 years, the annual revenue would $24,576,000. After 20, $25,165,824,000. After 30 years, $25,769,803,776,000.

After 30 years of growth, your company is the size of several countries, GDP-wise.

Assuming zero inflation in our monetary supply and thus zero price inflation, this is undoubtedly an unrealistic assumption.

Sure growth has to slow eventually, but it isn't unrealistic for a successful company to grow 100 percent per year for five years.

The use of "reality distortion field" is out of place here. It used to highlight a difference in culture, but I see no "distortion field" here. It is also applied something that has no standard. How old is a company before its no longer considered a startup? Reality? What is reality in a startup anywhere in the world?

I wonder if some of these barriers could be dropped fairly easily. For example, a few startups could get together and open source their legal boilerplate.

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